England and Wales regulator will shortly begin checking 7,000 firms for compliance
The regulatory body for solicitors in England and Wales has vowed it will undertake “strong action” after if found that a fifth of law firms are not compliant with money-laundering rules.
In March, the Solicitors Regulation Authority (SRA) asked 400 firms to send their firm risk assessments to demonstrate their compliance with 2017 money-laundering laws. It received 400 responses, but found that 83, or 21%, were not compliant.
It found that 43 firm risk assessments did not address all risk areas required. It also received 40 submissions that were not firm risk assessments, but rather other documents including client or matter risk assessments.
The SRA said that 64% used templates, which were generally of lower quality. It said that while templates can be helpful, too many firms seemed to use a “copy-and-paste approach” that did not consider risks and issues specific to their firm.
The regulator also said it was concerned that 135, or 38%, of the firm risk assessments they received were dated recently, which could mean that some firms may have created their assessments only as a response to the SRA request.
It said that it will shortly check the 7,000 firms that are under money-laundering regulations as part of an extensive and targeted program that involves visits to firms and requests for firm risk assessments.
“Money laundering supports criminal activity such as people trafficking, drug smuggling and terrorism. The damage money laundering does to society means that every solicitor must be fully committed to preventing it. The vast majority would never intend to get involved in criminal activities, but poor processes open the door to money launderers,” said Paul Philip, SRA chief executive. “A call from us should not be the prompt for a firm to get their act together. You need to take immediate action now if you are not on top of your money laundering risks. Where we have serious concerns, we will take strong action.”
